- 54 -
substantiate the 3-year moving average, we must reject this
portion of Dr. Hakala’s valuation methodology.
5. Conclusion
After evaluating both experts’ valuation methodologies in
light of the record, we now compare Mr. Menard’s TYE 1998
compensation to the Black-Scholes values of compensation paid in
TYE 1998 to CEOs of Home Depot, Kohl’s, Lowe’s, Staples, and
Target. With one exception,49 we use Dr. Hakala’s Black-Scholes
stock option values computed before discounts.
The comparison group companies compensated their CEOs for
services performed in TYE 1998 in the following amounts:
Company Compensation
Home Depot 1$2,841,307
Kohl’s 5,110,578
Lowe’s 6,054,977
Staples 6,868,747
Target 10,479,528
1Home Depot did not compensate its CEO with stock options or
restricted stock awards.
49Pursuant to rule 201 of the Federal Rules of Evidence, we
take judicial notice of the TYE 1998 proxy statements filed with
the Securities and Exchange Commission to the extent that they
represent reported compensation for TYE 1998.
Target’s proxy statement for its TYE 1998 reported that the
options awarded to the CEO for that year included all options
that would be granted to the CEO over a 3-year period.
Accordingly, for the Black-Scholes value of Target’s CEO’s stock
options in TYE 1998, we use only one-third of the value that Dr.
Hakala computed.
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